Zenefits, the troubled startup that's spent the
last four months trying to turn itself around under new CEO David
Sacks, is drastically reorganizing the company.

On Tuesday, Sacks
announced a second round of layoffs, the closing of the sales
office in Arizona, a plea for more employees to quit with a
voluntary separation package, and a major overhaul of the
company's whole structure.

The company's chief strategy officer, former McKinsey
consultant Abhijeet Dwivedi, hired by Sacks to help him turn
Zenefits around, also offered his views in an internal email
to staffers.

Dwivedi outlined a litany of the company's problems
and what the management team is doing to fix them. He noted that
some employees "feel stuck" in hyper-specialized jobs, but said
the company needs to focus more on empowering employees to take
ownership of building the "whole car."

Zenefits is a company that offers HR software to small businesses
if they hire it to be their insurance broker.

As we previously reported, it's the story of a
high-flying startup the "hypergrowth" mode of which ran amok, and
which wound up in hot water in multiple states for selling
insurance without being properly licensed, among other problems.

Its founding CEO, Parker Conrad, resigned in February and
was replaced by its famous "PayPal
mafia member" COO, Sacks.

Dwivedi said that since he started in February under Sacks,
he uncovered a company that had too many
departments with too many things falling through the cracks and
too many employees in "specialized" jobs who feel
"stuck."

He also encountered a bunch of rules that didn't make
sense, like not allowing some employees to talk to customers,
even though they might be the best-informed person.

Here's his full email, outlining Zenefits' major
overhaul:

Team,

When I started on the job as COO, I took several steps to better
understand Zenefits. First, I talked to lots of customers. I
wanted to understand why they loved us and have stuck with us.
For those customers that left, why did they make that decision?
What could we do differently? Second, I poured over hundreds of
jira tickets, and spent countless hours analyzing information
flows to understand where we were excelling and where we were
missing the mark. Lastly, I talked to the people on the front
lines to understand their pain points and hear their suggestions.
I have stolen shamelessly from those conversations. Everything we
are doing today is based on the ideas that stemmed from my
conversations with many of you.

What I learned is that we are too siloed, we have too much
complexity and we have an opportunity to create a more
customer-centric way of operating. The goal of the changes we are
making today in operations is to amplify what we do well, and
obliterate our deficiencies.

Over the last week, I have had discussions with many of you. I
have been inspired by how deeply you care about our customers’
success and how much you want Zenefits to succeed. It has been
motivating for me to see so many of you nod your heads when I lay
out this vision.

So today, we will roll out the changes in operations that put us
on the path to becoming the customer-centric company that we must
become. Let me explain the four main drivers of these changes:

End to end ownership

o We have too many departments. For example, I
remember one customer case that got bounced between teams because
no one was clear about who “owns” it. From now on, ownership and
accountability must sit together.

o When work gets passed around between highly
specialized teams, some context gets lost in the transfer.

More empowerment = better customer experience

o Some of our colleagues engaged in
hyper-specialized jobs feel stuck. They can’t see the whole
picture / the whole customer.

o Instead of an assembly line where each person does
one thing very well but doesn’t have ownership of the “whole
car,” we are creating customer pods where craftswomen/men do the
work end-to-end. We need to embrace the natural instinct to learn
more and have a broad impact. Why? It’s great for the customer.

o There are some truly remarkable individuals in
Operations at all levels. We owe it to ourselves to invest in
that talent.

Reduce internal complexity

o Every now and then, we need to step back and ask -
"Why is this done this way?" and change it if the answer doesn't
make sense anymore.

o For example, we have rules about who can and
cannot talk to the customer. These divisions were designed for a
good reason - to ensure the customer hears from Zenefits via a
single voice. However, in practice, the person who has the most
knowledge often is not the same as the person talking to the
customer. We must lead with knowledge and expertise.

Increase customer focus:

o We go to heroic lengths to do the right thing for
the customers. It is truly inspirational. However, sometimes our
silos can abstract us from our customers. A JIRA ticket = a
customer that needs help. Too often, it can become “a work-item”
that needs to be completed and when this happens, we become one
step removed from the customer.

o We think that by empowering more individuals to
own customer issues end-to-end, we will bring every team closer
to our customers.

In an effort to execute on these objectives, operations will be
organized in the following departments with the following leaders
reporting into me:

There is a lot of change for all of us. These changes mean that
some of you will be leaving us. I sincerely regret that we have
had to make those tough decisions. For many of you, especially
teams within broker services, you will have to make a transition
from doing one specific thing for the customer, to ensuring
end-to-end customer success. To help you with this, a team of 15
“blackbelts” who are experts in their domains will help train
you.

Those of you that work on one part of “broker services” will have
an opportunity to get licensed and go through BrokerU. For those
of you who are unfamiliar, BrokerU is a comprehensive 2-month
training program on the insurance industry and our insurance
platform. It’s much loved, and produces what I like to call -
“Ironman brokers” - i.e. smart individuals coupled with intense
technology that excel as brokers. There are other benefits
of going through BrokerU: doing so unlocks job opportunities
within Zenefits and brings everyone closer to our core business.

My hope is that these changes enable us to live our three core
values: operate with integrity, put the customer first, make
Zenefits a great place to work. I am beholden to you to make this
vision come alive and to realize our full potential. We have
20,000 small businesses out there that want to see us succeed and
that are counting on us to help them.

I have a favorite quote from Abe Lincoln from which I have found
inspiration over the last month especially: "The dogmas of the
quiet past, are inadequate to the stormy present. The occasion is
piled high with difficulty, and we must rise -- with the
occasion. As our case is new, so we must think anew, and act
anew. We must disenthrall ourselves, and then we shall save our
country."

Looking forward to the path ahead and to talking with all of you
in the coming days.